A Modern Fable

Some years
ago I received a version of this in an un-credited e-mail. I wish I could take
ownership of these wise thoughts. They are worth repeating for anyone who hasn’t
seen this.

Politicians often exclaim; “It’s just a
tax cut for the rich” and
that is just accepted as fact. But what does that really mean?

The parable that follows may help clarify the
issue.

Tax Cuts - A Simple Lesson In Economics

Every evening ten men go out for dinner. The bill for all ten comes to $100.

If they split the check the way we pay our
taxes, it would go something like
this:

The first four men (the poorest) would pay
nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh $7.
The eighth $12.
The ninth $18.
The tenth man (the richest) would pay $59.

That seemed fair to the majority and that’s
what they decided to do.

The ten men ate dinner in the restaurant every day and seemed quite happy
with the arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers,” he said, “I’m going to
reduce the
cost of your daily meal by $20.”

Now dinner for the ten only cost $80. The group still wanted to pay
their bill the way we pay our taxes.

The first four men were unaffected. They would still eat for free. But
what about the other six, the paying customers? How could they divvy up the
$20 windfall so that everyone would get his ‘fair share’?
The six men realized that $20 divided by six is $3.33 per person. If they
subtracted that from everybody’s share, then the fifth man and the sixth man
would each end up being ‘PAID’ to eat their meal.

After much debate the restaurant owner suggested a solution. He proceeded to
work out the revised amounts each should pay.

The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33%
savings).

The seventh now paid $5 instead of $7 (28%
savings).

The eighth now paid $9 instead of $12 (25%savings).

The ninth now paid $14 instead of $18 (22%
savings).

The tenth now paid $49 instead of $59 (17%
savings).

Each of the six highest earners was
better off than before and the first four continued to eat for free.

Once outside the restaurant, the men began to
compare their savings.

“I only got a dollar out of the $20,” declared the sixth man. He
pointed to
the tenth man “But he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a
dollar, too.
It’s unfair that he got ten times more than me!”

“That’s true!” shouted the seventh man. “Why should he get $10
back when I
got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t
get
anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for dinner, so the other nine sat
down
and ate without him.When it came
time to pay the bill they discovered
something important. They didn’t have enough money between all of
them for
even half of the bill!

That, boys and girls, journalists and college professors, is how our tax
system works. The people who pay the highest taxes get the most benefit
from a tax reduction. Tax them too much, attack them for being wealthy, and
they just may not show up at the table anymore.